Verizon Communications Inc (VZ)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Days of inventory on hand (DOH)	days	15.35	19.65	15.47	17.30	17.49	17.28	14.84	19.06	19.30	26.74	31.98	32.48	27.01	17.95	10.85	9.95	13.40	14.86	13.22	16.67
Days of sales outstanding (DSO)	days	73.95	72.85	71.66	71.03	70.82	64.24	62.69	61.25	65.37	63.69	100.27	64.18	65.14	60.35	58.40	63.41	68.05	64.31	63.79	66.13
Number of days of payables	days	71.21	—	—	—	85.21	—	—	—	70.71	—	—	—	71.08	—	—	—	49.72	—	—	—
Cash conversion cycle	days	18.09	92.50	87.13	88.33	3.11	81.53	77.53	80.32	13.96	90.43	132.26	96.66	21.07	78.30	69.25	73.37	31.72	79.16	77.01	82.80

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 15.35 + 73.95 – 71.21
= 18.09

Verizon Communications Inc has experienced fluctuations in its cash conversion cycle over the specified period. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Looking at the data provided, we can observe that the cash conversion cycle for Verizon was relatively stable in 2020, with figures ranging from around 31 to 82 days. However, there was a significant improvement in the cycle at the end of December 2021, which decreased to only 21 days. This suggests that the company was able to manage its working capital more efficiently during that period.

Subsequently, the cash conversion cycle fluctuated, reaching its peak in June 2022 at 132 days, indicating potential challenges in managing inventory, accounts receivable, and accounts payable during that period. However, there was a notable improvement by the end of December 2023 when the cycle decreased drastically to only 3 days, reflecting a significant enhancement in cash flow management.

From 2024, the cash conversion cycle remained relatively stable, fluctuating between 18 to 92 days. Overall, the trend indicates variability in Verizon's efficiency in managing its working capital and cash flow, with periods of improvement but also challenges in certain quarters. Monitoring and potentially optimizing the cash conversion cycle could help the company enhance its financial performance and liquidity management.